South Africa’s Credit Ratings Remains Unchanged-Fitch

Ratings firm Fitch kept both South Africa’s local and foreign currency credit ratings unchanged at BB+, one notch below investment grade, with a stable outlook, the agency said on Thursday.

In April, Fitch downgraded South Africa’s credit rating to sub-investment grade after Zuma abruptly fired Pravin Gordhan as finance minister, saying it would likely result in a change in economic policy direction.

“The affirmation reflects that while a number of developments point to a weaker fiscal outlook and consequent faster pace of debt accumulation, potential fiscal consolidation measures after the ANC’s (African National Congress’) elective conference in December could mitigate those trends,” Fitch said in a statement.

The ruling party’s conference in December is set to elect a successor to President Jacob Zuma as its head. Spats between contending factions have spilled over into the public and raised fears that policy will take a backseat to the power struggles.

Moody’s and S&P Global Ratings are due to announce their decisions on Friday. A one-notch cut of the local-currency rating by both agencies will likely to trigger forced selling of up to $12 billion of the country’s bonds.

Thirteen of 25 economists surveyed on Monday said either S&P Global Ratings or Moody’s was likely to cut the local currency rating to junk on Friday.

In response Treasury said on Thursday Fitch’s decision not to change the country’s credit ratings would give it an opportunity to deal with the issues that led to the downgrade in April.

“By not downgrading the country further, Fitch is providing South Africa with an opportunity to address issues that can lead to an upward revision to the ratings,” it said in a statement.